My brother and I got talked into a horrible situation. We bought a house in Hudson, FL as an investment. We bought the house for 215K a little over a year ago. We were told by a realtor (family member) that this house was a great deal because the house was brand new and that it was worth a lot more that it was being sold for; this was not the case. The house is probably worth about the same, if not a little less now. The problem is that we are paying $1600 a month on a 100% financed loan and we can only rent it out for about $1100/month. This $1600 does not include the very expensive insurance and taxes. Neither of us live in Florida and because the loan is 100% we can't refinance to try and get our payments down. We both make good money and have good credit, but we don't have thousands of dollars sitting around to help pay down the loan to get a better mortgage loan. We have a Property Manager on line who is currently trying to rent out our place since our last tenants just moved out. We are wondering if we should sell the house right now at probably a $20K loss when you include realtor and closing fees, or should we hang on for our dear lives for as long as we can and try to wait it out until the market turns? Any input is much appreciated. I am hoping someone out there has a secret fix all solution.

Florida was over-inflated to begin with.It sounds like you are new investors and got excited abotu making the money before doing the proper due diligence.The exit strategy is just as important as the acquisition process.Those who fail to plan,plan to fail!

If you want my opinion I would sell now for a number of reasons.Let's say you keep this house instead of taking a 20k hit today.The house is worth 200k and with insurance,taxes,and renting it out for 1,100 you still have to pump 1,500 more a month into it.So in a years time you will have put about another 20k into it and not paid down the loan and what if the market depreciates even less?

I just think cut your losses now and sell and you can claim the loss on your taxes to offset and lower your tax bracket.Then reinvest in better areas closer to home.In my opinion certain types of commercial are great for investments.The rents get raised more and the leases are for longer terms.The businesses upkeep your property because there clients go in and out of it daily.Even if the property gets rundown you have other developers who will buy out the commercial property to revitalize it.

no legal advice good luck

Super_Realtor is all over it, advice so good it should be paid for. Move on quickly, take tax break (consult tax professional) and consider it a hard lesson learned. Wish you the best, and a prosperous future!

Thanks a lot for the help. I have been thinking that we should get out, but it is was hard to accept the loss. I will start looking into options of getting out. Any suggestions? Thanks again.

Knowing when to get out of a bad deal isn't losing it's winning.

Right now and in the future if you keep this property you will lose money.What if you sell it and lose 20k but then it frees you up to invest on something else where you make 40k or more and are up 20k,wouldn't you feel better then?

Investing is about taking measured risks,nothing is a sure thing but by analyzing the numbers of a deal before going in you will almost eliminate the risk.In the future run your own numbers.It sounds like this agent may have wanted a quick commission and told you what you wanted to here.

I would rather hold my money 6 months and wait then to get impatient and invest in a marginal deal.

Always know when to get out of a bad investment, or any bad business decision in general. I've seen far too many people crash and burn for pride and not obeying their common sense.

More power to you!

Contact the lender and begin a short sale process with them. Call them and ask for the short sale package so that you can prepare a package to submit to them for the short sale (FYI: this is a service I provide clients through my business).

Some hints on proceeding with the lender: **Let them know that your financial situation has changed and you will not be able to continue paying on the thing. **Tell them that you are looking to sell, but that the estimates of value are less than your loans. **Get it on the market.

This may damage your credit, but you could get out without the loss of the $20K. Which is the more important goal - preserving credit or preserving cash?

What does everyone think about the short sale process? I am not too excited about my credit taking a huge hit and won't the tax benefits of the loss of out weigh the tax burden of a short sale? Thanks everyone for your input. I have talked to a few realtors and have found that a suggested price to sell the house quick is $191,000. With the cost of a realtor added in this would be a loss of roughly $35,000. We have started looking into a sell by owner to save us $5K to $6K. Either way, none of it looks good.

try owner financing. you bought high to begin with so sell it higher by advertising your home as owner will finance. there are plenty of non conforming buyers out there that are being denied due to the credit crunch. let them assume your payments and responsibilities of the property by giving them the tax write offs in exchange.

essentially this is a commercial type triple net lease used in residential. this way it eliminates your negative cashflow, double mortgage payment and any land lording headaches. its a long term investment just like what commercial leases are and the tenant will be happy to pay the premium payments if they were given the incentive of tax write offs while leasing and a equity share if they decide to buy it sometime in the future upon qualifying for a refinance.

if you're selling by owner, try this ad and let me know what leads you're getting

TAKE OVER MY PAYMENTS AND ILL GIVE YOU MY HOUSE
TAX BENEFITS INCLUDED
NO DOWN - NO BANK QUALIFYING - NO CREDIT APPS
3 MONTHS PLUS 5% CLOSING COSTS AND ILL JUST GIVE IT TO YOU
CALL OWNER XXX-XXX-XXXX

if you're having trouble finding these tenant/buyers to take over your payments, go solicit seller's who are in a short sale position or recently had bankruptcy or foreclosure. these are previous owners who understand making the premium payments. since these people cannot qualifying sometime after 7 years, your the bank and its non fico driven so you can easily take them in regardless of credit. these people will retain the benefits of ownership(tax write offs, principal reduction, future appreciation) without being on title and no new loan.

this is how i see it before any seller agrees to a short sale.

first option is selling
second option is leasing
third option is refinancing(if you can)
fourth option is reinstatement(borrow from hard money, private money, friends, relatives, 401k, IRAs, selling personal property)
fifth option is seller financing
sixth option is loan modification
seventh option is forbearance
eight option is deed in lieu
ninth option is short sale

So, if we did an owner finance we would ask the buyer to give us 3 months mortgage ($4800) plus 5% ($10750) and then they would take over the $1600 monthly payments? They would then own the house in 30 years when the loan is payed off or until they can afford to pay us off the rest? Thanks for the help.

"fourth option is reinstatement(borrow from hard money, private money, friends, relatives, 401k, IRAs, selling personal property)"

Just my opinion but I beleive you should never touch 401k's or Ira's these are your retirement accounts that are safe from judgements and lawsuits.

Well let's see let's make up the mortgage and totally wipe out our retirement and then get hit with a penalty on top of that for touching the funds.This is a horrible move as unless your financial situation changes you will eventually lose the house and have exhauseted your retirement funds.

I would let it foreclose before you touched your retirement money.Rememeber if you go for a short sale and they deny it any information on assetts and bank accounts they now have to go after you with so there is a risk there.

It still seems if you took the hit and invested in a down market you could more than make up that 30k loss in no time.

Ultimately it's your choice,you will live with the decision and the consequences and not anyone on this board will.

Good luck and no legal advice

Can't add much more that that! Super is all over it.

the 3 months and 5% is negotiable based on a mutual agreement between investor and tenant/buyer.

ideally id set the term for 8-11 years and give them that much time to qualify for a refinance.